The federal government has rejected a plan by the Houston government to postpone implementing a carbon tax on gasoline and home heating oil less than two weeks after receiving the province’s proposal detailing a “better-than-a-carbon-tax” alternative.
“You are proposing to end Nova Scotia’s cap-and-trade program, with no replacement that would put a price on pollution,” wrote Steven Guilbeault, the federal Minister for Environment and Climate Change Canada, in his August 29 letter to Tim Halman, Nova Scotia’s Minister for Environment and Climate Change. The letter’s contents were reported yesterday by the Chronicle Herald.
“The federal government is committed to continuing to put a price on carbon pollution, with clear requirements that are implemented consistently across Canada and provide certainty to businesses and households,” Guilbeault continued.
On Tuesday, Halman, who is in Whitehorse for a national conference, told reporters, “there is a big policy difference here but it’s my hope that Environment Climate Change Canada will take a second look at our proposal.”
“We have a real sense of disappointment and see a missed opportunity on the part of the Ottawa to work together to reduce GHG emissions,” he said.
Guilbeault left the door open for more negotiations, but the clock is quickly ticking toward Friday’s deadline to approve any equivalent pricing scheme. To meet international commitments to slow climate change, the federal government will implement price increases on carbon that range from $65 a tonne next year to $170 a tonne by 2030.
This will make gasoline, diesel, and furnace oil more expensive for Nova Scotian consumers who have not paid any tax for the past four years because of a homegrown cap-and-trade program. That program did achieve emissions reductions through auctions that allowed polluters to purchase carbon credits. The shift to a federal carbon tax January 1 will immediately see gasoline prices rise by 14 cents a litre in Nova Scotia.
For low-and- middle-income households, those costs will be partially offset by quarterly rebate cheques sent out by Ottawa. In four provinces where the federal carbon tax has been in effect, Ottawa says an average family of four will receive cheques in 2022-23 ranging from $745 in Ontario to $1,079 in Alberta. Nova Scotians who live in rural areas will receive 10% more than the base amount, which will be calculated based on last year’s tax return.
Reporters asked Halman why federal rebates for consumers wouldn’t ease his government’s concerns around affordability.
“It’s the direct (upfront) costs we are concerned about,” Halman replied. “The tax combined with higher power rates will have a punitive impact on residents. In our evaluation, the most clear and present danger to affordability for Nova Scotians is a carbon tax because of the 14-cent a litre spike. That’s why we are opposed to it, along with the fact we have strong environmental policy here.”
Halman argues the Environmental Goals and Climate Change Reduction Act, which the Progressive Conservative government passed last October, contains the strictest limits on carbon reductions in the country — with Nova Scotia committed to reducing GHG emissions by 53% in 2030, below the 40-45% target mandated by Ottawa. Nova Scotia is also committed to closing coal plants by 2030.
“We don’t need it (the carbon tax),” Halman said. “We aren’t opposed to a carbon tax but this is not an appropriate time given the economic circumstances we are in. What we need is to work with Ottawa to get regulations going on offshore wind development, Bay of Fundy tidal, and the Atlantic Loop. These are real, concrete, robust programs for greenhouse gas (GHG) reductions.”
So, what’s next?
“The provincial government needs to make a good-faith attempt to negotiate their compliance with pollution pricing before time runs out,” said Thomas Arnason-McNeil, a climate policy spokesperson for the Ecology Action Centre. “As things stand, they are playing a high stakes game of chicken with the federal government and betting that the impacts of the federal carbon tax will benefit them politically. We need to stop playing politics with climate policy and develop a real plan to transition our economy away from fossil fuel.”
Not surprisingly, Nova Scotia’s official Opposition party said the province has dropped the ball when it comes to negotiating how to lower carbon emissions without creating more hardship for consumers.
“At the eleventh hour, the Houston government cobbled up a document to present to the federal government earlier this month,” said Liberal leader Zach Churchill in a news release yesterday. “The pitch was a list of environmental targets with no details of how to achieve them and made no mention of carbon pricing. Unsurprisingly, the plan was rejected. Now, Nova Scotians will be left to pay the price.”
Nova Scotia’s proposal to Ottawa did not put a price on carbon because the government says taxpayers will continue to pay for emissions reductions through higher power bills in a province where electricity accounts for 40% of greenhouse gases.
Guilbeault responded, noting that while actions have been taken to transition off coal and toward renewable sources of energy “changes in Nova Scotia’s industrial landscape have led to a substantial decrease in Nova Scotia’s emissions profile. However, this is not a reason to avoid having a price on pollution.”
The same point was made by professor Larry Hughes in the Halifax Examiner August 26 when he noted the closure of Northern Pulp, coal mines, and the end of offshore gas development had also helped bring down emissions.
Halman said the province would review its options before the Friday deadline on submissions to Ottawa. No Plan B was articulated. Halman appeared to rule out a suggestion from the Halifax Chamber of Commerce when a journalist asked if the province might re-consider dropping the 15.5% provincial portion of the gasoline tax drivers pay at the pumps. Halman said that question — and that decision — rests with the province’s finance minister.
But if Ottawa continues to reject Nova Scotia’s argument and a federal carbon tax is implemented next year, the province is not without options. Estimates show that by 2030, Nova Scotia will have collected about $1 billion from the carbon tax it could then choose to re-distribute to citizens directly or through programs that help people buy electric vehicles or solar panels or make their homes and businesses more energy efficient.
That requires more work and more planning but could result in short-term pain for long-term gain.